Gulf's steel pipe industry set for six-fold growth

Sector conference and suppliers earmark boom as steel prices drop

Supply is closing in on demand in the region.
Supply is closing in on demand in the region.

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The steel pipe industry in the GCC is to grow six-fold over the next five years as booming oil and gas exploration and projects will meet a fall in the metal’s price, according to one major manufacturer.

Jun Yao, general manager at Baosteel Group Corporation, said the Middle East makes up 5% of the company’s $100 million annual global sales, with the UAE set for strong growth up to 2015.

“In five years, the steel industry in the UAE will grow 10 percent in the GCC and North Africa region” he told an audience at the close of TeknoTube Arabia 2011. “As the largest steel provider in China and the third largest in the world, we are upbeat on this region. Prices of steel, which were at its peak in 2007, have dropped by 10%.”

Steel production in the Middle East is close to meeting the domestic demand that has been driven by areas of growth in the construction industry, in particular civil work in the oil and gas sectors.

Companies such as Zamil Steel have boosted their production, and last year started a test run for a new galvanising plant in Damman that will potentially increase their output in this department from 50,000 tonnes to 75,000 tonnes per year, or 50%.

JESCO in Saudi Arabia plans to produce 200,000 tons in 2011, with a total rolling and finishing capacity of 400,000 tonnes. Al Jazeera Steel Products, the listed Omani supplier, has recently upped production capacity to 300,000 tonnes per year.

This has meant that the region’s reliance on imports has lessened. But Chinese companies have also strived to develop in the Middle East, and their contribution – combined with companies from India and Europe - will account for more than 30% of tube and pipe consumption in the GCC region in 2011, according to the trade show’s researchers.

“There is a huge market for the Chinese companies in the Middle East and we are looking for agents from the region. Tubes and pipes manufactures from China are coming here to test the market,” Yao added.

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